A question for those of you who've just lost the $100 loyalty benefit.

[nocl]

3 minutes ago, CarelessAndConfused said:

Also, let's keep in mind what a mercurial concept "cruise fare" and "onboard spend" are.  With all these posts on all of the forums talking about elite benefits and what's important and not and of course everyone has their own unique list.  I've always thought that personally, I would fare best if cruise fares were "a la carte" and about 50% what they are now and all you get for that is transportation, turndown service, and your room.  Virtually everything else would be a la carte.  Buffet would be $10/12/20.  Dining rooms $15/20/25.  Specialty dining more expensive than today.  Cost per hour per deck chair.  Cost per hour for pool access.  Cover charge for various venues.  And an average of $50 per show in the "big theater". What would the concept between "cruise fare" and "onboard spend" be then?   

 

The cruise lines don't give a crap about cruise fare or onboard spend.  If they thought the maximum total profit maximization point was to charge one lump ALL inclusive price (as some lines do), then Princess would have no qualms about taking in ZERO on board spend.  All this segregation is merely an intended obfuscation to bilk more money from the cruising public by confusing fares, not only even between cruise lines, but even within all of the possibilities on just Princess. 

However cruise lines are classic high capital investment businesses in a highly competitive business with limited pricing power.  As a number of no longer existing cruise lines learned mass market lines have to keep fares low and make money in other ways, the on board spend.

 

The last few years have been the golden period for cruise lines with profits reaching into the teens where as prior periods the normal profit was in the low single digits.

 

They did this by doing all of the things that many people hate.  They increased the size of ships and made them more economically efficient, the developed very effective fare pricing models, they developed the ability to keep fares relatively low (rates of increase in cruise fares have been much lower than inflation for the last 20 years) developing on board spending as larger components of their revenue models.  They have also moved to gain more control of off ship spending in private ports and islands

[getting older slowly]

Just to put a figure on Fare vs On Board Spend...  our OBS average is between 15-20% of fare

 

How does this compare to others  ??

[nocl]

2 minutes ago, CarelessAndConfused said:

 

There's no question that they have to get to a certain acceptable recurring profit level but how they get there is truly limitless in permutation.  As for whether the cruise line would object to losing 5% to 10% of repeat loyal customers because the company wanted to save $25 per cruise, I hope you're never on the board of a company I invest in.

Companies do it all of the time.  There is an entire sales/marketing branch that deals with customer identification and stratification based upon the profitability of customers. 

 

Do you really think that the company did not do an estimate of how many Elite customers they might lose as a result of these changes and the potential impact?

 

There are loyal customers and there are loyal profitable customers..

 

Mass market cruise lines need to fill cabins, but they also need the spend in addition to fares.  On of the drivers with going with programs like the all included fares is that it locks in a large amount of the onboard spend into the initial purchase.

[AnyMajorCruiseDude]

16 minutes ago, CarelessAndConfused said:

 

I think it's you that is failing to see all sorts of things regarding this matter.

 

 

Ok

[nocl]

1 minute ago, CarelessAndConfused said:

 

If all this that you said were true, then why would Princess bring in Princess Plus or Celebrity go "All Inclusive" fare pricing?  Yes, cruise lines, as with most companies, like to tinker with their offerings to try and figure out what the best mix/price is for various aspects of their business.  And I'm good with all that.  But I don't necessarily agree with the conclusions that you and some others draw about losing Elite members not being a big deal or just the overall implication that they are doing the right thing with this model.  We just don't know.  But I'm inclined to believe that a model that markets to new cruisers who cruise a lot less but spend some money when they do vs. keeping a loyal repeat base happy is not one that is obviously the thing to do as many here seem to want to observe.

 

 

Because as I mentioned those fares lock in major portions of the onboard spend into the initial sale.

 

The cruise line accounting still separates that into fare and onboard so when one purchases an all inclusive fare that revenue will go into two pots.  The amount equivalent to the base fare will go into the fare pot.  The amount for the all inclusive portion will go into the onboard spend pot.

 

 

[nocl]

2 minutes ago, CarelessAndConfused said:

 

 

Yes, I'm fully aware of the concept of an unprofitable customer.  Because in many industries, they actually exist.  As far as I'm concerned, I don't see that in the cruise industry.  You and others make it sound like heavy onboard spend in perpetuity is possible.  Heck, when you take into account all of the venues that are already maxed or near it (specialty dinings, spa, adult only areas) and since you've pretty much eliminated the drink package with Plus, and excursions will only appeal to newbies for the most part as the veterans have "been there and done that" so there's only even so much onboard spending to be garnered in the long run unless you think there is some pent up demand for spending on cruise ship art or the trinkets that they hawk in their stores that hasn't been quite tapped properly.

The revenue for drink packages is considered to be onboard spend, the all inclusive portion of all inclusive fares are onboard spend.  Basically any revenue for excursions, alcohol, internet, specialty dining, etc is considered for accounting purposes to be on board spend independently of when the purchase actually takes place is accounted as on board spend.

 

That is one of the reasons that frequent cruisers are not that profitable and the cruise line continuously needs to attract new cruisers to fill cabins because they are more profitable.  The cruise lines needs some low spend long term cruisers, but they cannot afford too many.  It is similar to solo cruisers the cruise line can afford some, even though on average they lose out compared to two people per cabin, but they cannot afford too many.

 

If you get too many of a low profit category you make adjustments.  Now a company is limited in many things that it can do.  But it can trim the benefits and model how many are they likely to lose by the adjustment.

 

Any company that did not model the potential loss of customers based upon the adjustment in Elite benefits would be rather incompetent.  The cruise lines have very good modeling systems and have a very good understanding upon their passenger demographics and passenger spend.

 

Let me put it another way, with the number of ships removed from the fleet can you think of a better time for the cruise line to make some adjustments that might trim off a percentage of long term, less profitable customers.

[nocl]

9 minutes ago, CarelessAndConfused said:

 

You're talking accounting concepts when we are discussing profit maximization and how that best gets achieved.  I don't care, nor do I think the cruise line does at the end of the day, where the money comes from.

It still comes done to that if one only pays the basic fare and does not do any additional spend the revenue gained from that passenger is 25-30% less than their average passenger in the same class cabin.  They certainly do care about that. 

 

That is why they push the other revenue opportunities as much as they do.

[AnyMajorCruiseDude]

2 minutes ago, nocl said:

It still comes done to that if one only pays the basic fare and does not do any additional spend the revenue gained from that passenger is 25-30% less than their average passenger in the same class cabin.  They certainly do care about that. 

 

That is why they push the other revenue opportunities as much as they do.

Thank you. Some cannot understand

[nocl]

14 minutes ago, CarelessAndConfused said:

 

That 25-30% is garnered by a wide dispersion, not with your average almost cruiser spending 25-30%.  It's probably because many new and/or infrequent cruisers are spending 30-50% because they are going to an excursion on most ports and whooping it up as a one a year or decade thing.  As I wrote above, there isn't anywhere near enough capacity to increase onboard spend by that much from the usual suspects (dining, spa, excursions).  Maximum capacity on most all of these types of things relies on the VAST majority of the ship not using them. 

Yes it is an average but it still comes down to the fact they some cruisers are much more profitable to the cruise line that others. And if the number of non-profitable cruisers gets to large then they either have to suck more money out of the profitable cruisers to maintain the average (not easy), or they need to increase the percentage of profitable cruisers compared to non-profitable ones.

 

So they can afford some non-profitable cruisers, just not too high of a percentage of them.  

Edited July 4, 2021 by nocl

[KeepCalmBearOn]

1 hour ago, getting older slowly said:

Think about it you fill up at same petrol station all the time.... do you expect a discount ??

 

I can't speak to what happens Down Under, but here in the Colonies.... my grocery stores have deals with the petrol companies; Krogger has a deal with Shell Oil, Safeway has a deal with Chevron. When I get to a certain level of points, I get 20 cents off every gallon.

 

In the olden days of "gas wars" when there'd be 2 or 3 gas stations on a four corner intersection and gas was 40¢ a gallon, they giveaway free beach towels with a fill-up, comic book character drinking glasses, Blue Chip or Green Chip stamps that you could redeem at a store of goods, LA Dodger Bobble Heads and more. And they gave you these things AFTER they filled the tank, washed your windows, checked you tires air pressure, battery water level, oil level and radiator water level.....  all for buying gas at 40¢ a gallon.

 

2 hours ago, nocl said:

The funny thing is we tried HAL about 10 years ago and did not care for it. Tried it again about 3 years ago and found that we liked it much better with some of the changes such as the Lincoln Center. We now do several cruises a year on them, same as Princess.

 

I haven't been on HAL in 6 years probably and for no good reason other than the schedule or I went with other lines I am building perks with. On HAL we are just into 4 Star Mariner, 5 Star seems so far away, and the rewards when you get there don't seem as impressive as RCL or Celebrity and not even as good as Princess is (or maybe was, haven't looked too hard at it yet).

 

Someone said I should give the "new" ships on HAL a try. I went and looked at the newest ships online, official site and YouTube, and frankly I wasn't blown away. It was like enh. I might do HAL again because I like some of their trips, especially CA Coast ones, but I am not excited to try a new HAL ship. I am excited about the new ships from PCL, RCI, NCL and even a little excited to try Celebrity Apex.

 

5 minutes ago, CarelessAndConfused said:

Also, let's keep in mind what a mercurial concept "cruise fare" and "onboard spend" are. 

 

I don't get what makes cruise fares and onboard spend, " mercurial concepts"?

 

5 minutes ago, CarelessAndConfused said:

I've always thought that personally, I would fare best if cruise fares were "a la carte" and about 50% what they are now and all you get for that is transportation, turndown service, and your room.  Virtually everything else would be a la carte.  Buffet would be $10/12/20.  Dining rooms $15/20/25.  Specialty dining more expensive than today.  Cost per hour per deck chair.  Cost per hour for pool access.  Cover charge for various venues.  And an average of $50 per show in the "big theater". What would the concept between "cruise fare" and "onboard spend" be then?   

 

And you hope nocl never gets on a cruise line board?

 

5 minutes ago, CarelessAndConfused said:

The cruise lines don't give a crap about cruise fare or onboard spend.  If they thought the maximum total profit maximization point was to charge one lump ALL inclusive price (as some lines do), then Princess would have no qualms about taking in ZERO on board spend.

 

They understand their business model and their position in the middle market. I am not sure you do,

 

5 minutes ago, CarelessAndConfused said:

All this segregation is merely an intended obfuscation to bilk more money from the cruising public by confusing fares, not only even between cruise lines, but even within all of the possibilities on just Princess. 

 

All this sesquipedalianism patter is banal.

[nocl]

1 minute ago, CarelessAndConfused said:

 

It's clearly you that cannot understand.  Do you think the pandemic woke them up and all of sudden they decided, "Hey, you know what, we have to make as much money as we can with this business however we can do it."  This is what they ALWAYS try to do. 

 

No but they probably did run the numbers on the size of the fleet for the next five years and decide that now was a good time to  trim the loyalty OBC and that they could afford the loss of some of the recipients.

 

As I explained else where the Internet change was most likely the result of the change in how Internet is sold and managed.  That all they did was transition the benefit to match the way Internet is sold now, unlimited by device, instead of a set number of minutes enabling to get rid of the support time spent by their IT manager in dealing with all of the all my minutes are gone complaints or the Internet is slow so I am wasting all of my minutes complaints.

[nocl]

1 minute ago, CarelessAndConfused said:

 

Because they are stratifying it as "people who spend onboard" and "those that don't".  They aren't tracking the life cycle of the cruiser but blindly interpreting the end result.  The people who spend are on the newer side, primarily because they haven't tried any of it.  Not Sabatini's, Crown Grill, spa, excursions, Retreat Lounge or whatever.  The more you've tried these things the less you are going to do it.  That is why the maximum capacity on a ship for these things is relatively very small compared to the total passenger list.  Which leaves a crap load of cabins to fill, who can't even spend on many of these things even if they desperately wanted to.  That's what loyal passengers do.  And if you kick 5-10% of your elite group out, then you may as well get rid of one of your ships.

If you haven't noticed in the last year they got rid of several, and that capacity will not be made up for a few more years.

[KeepCalmBearOn]

18 minutes ago, nocl said:

Let me put it another way, with the number of ships removed from the fleet can you think of a better time for the cruise line to make some adjustments that might trim off a percentage of long term, less profitable customers.

 

When I start my cruise line, you can be on my board of directors any time.

[caribill]

5 hours ago, getting older slowly said:

Think about it you fill up at same petrol station all the time.... do you expect a discount ??

 

 

Actually, yes.

 

The gas station I use is associated with a grocery chain. The more you spend at the grocery store, the more discount they give you at their gas station, up to $1.00 per gallon.

 

On a recent fillup, I saved 23%.

[caribill]

6 hours ago, Knickearth said:

We just learned that our princess visa credit card with Barclays Bank - which always gave us $500. For 40000 points now wants 50000 points.

 

I'm pretty sure that the credit card OBC is paid by Princess, so the bank is not to blame for the increase in cost.

[caribill]

3 hours ago, nocl said:

 

 

As I explained else where the Internet change was most likely the result of the change in how Internet is sold and managed.  That all they did was transition the benefit to match the way Internet is sold now, unlimited by device, instead of a set number of minutes.

 

The minutes benefit was also by device as the minutes could be shared among multiple devices, just using one at a time. Same as with the single device unlimited package.

 

Originally the Platinum/Elite/Suite Internet benefit was unlimited minutes, but that was at the time the only Internet access was via desktop computers in full suites and in the Internet Cafe, probably lkess than 50 maximum users at a time.

 

When they eliminated the unlimited minutes, replacing them for a fixed number of minutes (except fof the full suites which lost the entire Internet benefit), any passenger might have had a laptop to access the Internet and the bandwidth could not support everyone trying to use the Internet at the same time.

 

Nowadays with smart phones existing, it is more likely that almost every passenger has a device that can access the Internet. Thus the development of the hardware for MedallionNet which has much greater bandwidth as long as the ship does not go too far north or south.

 

For those who survived with the number of free minutes, having one single device Internet package is probably enough unless there is a true need for multiple people to be online at the same time.

 

Those who purchase Princess Plus fares are paying for two Internet packages. Those who purchase Princess Savers fares only then need to optionally purchase one Internet package.

 

 

[cr8tiv1]

Throwing in a monkey wrench.

 

I am one that used to buy high end jewelry from Facets before EFFY took over.  Now I don't, never liked their production line.  So I spend less on the ship.  BUT....I do leave my steward and servers more than the allotted gratuities, thereby "helping" Princess pay their crew more.  This practice will not end just because they took away my loyalty credits.  Just saying....

 

Any OBC was always something to be surprised by and excited about.  Loyalty OBC was special.  Where's the fun?  Where's the "Come back new"?  Where's the joy of cruising?  I am awaiting my next cruise and hope that my disappointment in Princess wanes before I get on the Grand so that I can truly have a memorable cruise.

[mellon1]

On 7/2/2021 at 7:14 AM, PescadoAmarillo said:

We will definitely cruise less, although, to be fair, we were already going to cruise less. But that sentence in an email cost us $1000 just this year alone.  We have a budget (albeit a sizable one) for cruising, and this change means we will cruise fewer days. We also have FCDs with two other cruise lines, and some of that budget will definitely be spent on cruises with them. 

So this applies to cruises already booked...2 years ago?  

[mellon1]

On 7/2/2021 at 9:41 AM, jeeper2 said:

The loss of the Loyalty OBC, free Internet minutes (if I choose to not add Princess Plus), and the effective loss of Priority Boarding ( We always arrived early and enjoyed the drinks and snacks while waiting in the lounge), is not enough to make me take a refund and quit cruising with Princess.  What it does do is make it easier for me to book with some other lines I have been anxious to try!

I agree.  We have been so loyal with Princess because of the OBC.  Our friends have been trying to get us to switch to Celebrity for years.  I guess I will begin looking, although I hate to do that.  Everyone has been affected financially because of covid and those of us who cruise, still want to go so will look for the best way to go.  

[PescadoAmarillo]

30 minutes ago, mellon1 said:

So this applies to cruises already booked...2 years ago?  

Unfortunately, yes.  Even cruises after final payment. . 

[mellon1]

1 minute ago, PescadoAmarillo said:

Unfortunately, yes.  Even cruises after final payment. . 

Well that just is not right, especially with cruise prices increasing so much too.  Oh well, our dream of B2Bs in the winter every year definitely won't be happening.  I am sad

[mellon1]

7 hours ago, caribill said:

 

I'm pretty sure that the credit card OBC is paid by Princess, so the bank is not to blame for the increase in cost.

I wonder if the Princess credit card will still allow double points if over $4,001?  Anyone know that?  We count on that also.  

[Syracusefan44]

31 minutes ago, mellon1 said:

I wonder if the Princess credit card will still allow double points if over $4,001?  Anyone know that?  We count on that also.  

That is a statement credit benefit is provided by Barclays Bank for using their credit card not Princess Cruises.
 

With Barclays charging vendors almost 4% on every transaction + the 13.99% interest rate if you don’t pay your bill every month they are more than happy to give you 2.5% back in the form of a statement credit for a cruise over $4001.  

[CruisinFinsUp]

1 minute ago, Syracusefan44 said:

That is a statement credit benefit is provided by Barclays Bank for using their credit card not Princess Cruises.
 

With Barclays charging vendors almost 4% on every transaction + the 13.99% interest rate if you don’t pay your bill every month they are more than happy to give you 2.5% back in the form of a statement credit for a cruise over $4001.  

Exactly.   Consumers ultimately pay for all benefits through increased prices on the products we pay.  
 

Anyone who believes any of these "discounts" or "benefits" come from the corporations' bottom line does not understand corporate economics.  The companies never pay any more than their preapproved  marketing budgets allow.
 

Companies will pair up to offer benefits, but the consumer pays, always. 
I participate in these deals and in the "points cards" knowing fully that I'm paying for the points already in the product prices, so I might as well benefit from them, and knowing fully that the data collectors are analyzing and selling my purchasing habits to anyone who cares to buy them.  
 

 

[Steelers36]

11 hours ago, scottca075 said:

 

I can't speak to what happens Down Under, but here in the Colonies.... my grocery stores have deals with the petrol companies; Krogger has a deal with Shell Oil, Safeway has a deal with Chevron. When I get to a certain level of points, I get 20 cents off every gallon.

 

In the olden days of "gas wars" when there'd be 2 or 3 gas stations on a four corner intersection and gas was 40¢ a gallon, they giveaway free beach towels with a fill-up, comic book character drinking glasses, Blue Chip or Green Chip stamps that you could redeem at a store of goods, LA Dodger Bobble Heads and more. And they gave you these things AFTER they filled the tank, washed your windows, checked you tires air pressure, battery water level, oil level and radiator water level.....  all for buying gas at 40¢ a gallon.

 

 

I haven't been on HAL in 6 years probably and for no good reason other than the schedule or I went with other lines I am building perks with. On HAL we are just into 4 Star Mariner, 5 Star seems so far away, and the rewards when you get there don't seem as impressive as RCL or Celebrity and not even as good as Princess is (or maybe was, haven't looked too hard at it yet).

 

Someone said I should give the "new" ships on HAL a try. I went and looked at the newest ships online, official site and YouTube, and frankly I wasn't blown away. It was like enh. I might do HAL again because I like some of their trips, especially CA Coast ones, but I am not excited to try a new HAL ship. I am excited about the new ships from PCL, RCI, NCL and even a little excited to try Celebrity Apex.

 

 

I don't get what makes cruise fares and onboard spend, " mercurial concepts"?

 

 

And you hope nocl never gets on a cruise line board?

ROFL

 

They understand their business model and their position in the middle market. I am not sure you do,

 

 

All this sesquipedalianism patter is banal.  Mostly true.

 

Expand to see the red print.

Edited July 4, 2021 by Steelers36